The Next Green Thing: Green Insurance

July 10, 2008

As I walked from booth to booth looking for something new and different at last month’s Greening the Heartland conference, I actually did a double take when I saw the words “Green Insurance” on one display. Here was something new that I had to learn more about – was it another gimmick or attempt to force green into an unrelated industry? I spoke to Stephen Horack, a “Green Insurance Specialist” of St. Louis based Huntleigh McGehee, and I have to say that I was sold on the idea right away. Green insurance is not just a good idea, it’s potentially a revolutionary idea.

Started in 2006 by Fireman’s Fund, a member of the United States Green Building council, green insurance protects owners of green commercial or residential buildings. In the case of a loss, Fireman’s Fund would bring in a LEED-AP to oversee reconstruction of the building to its original LEED certification level, making sure that the building systems operate at peak performance and in alignment with one another. If this seems like a no-brainer, consider submitting rebuilding plans to an insurance company that has no experience with green building. Would you have to explain why every component of the building was built that way, rather than a less expensive non-green alternative?

The potentially revolutionary aspect of green insurance is the option for owners of non-green commercial buildings and homes. For a small cost of about $70 a year per $1 million insured, the owner of a non-green home can make sure that home is rebuilt to LEED Silver certification standards in the event of a total loss. For those who are interested in green homes but don’t want to move from their current homes, this insurance would provide the peace of mind that in the event of a loss, their home would be rebuilt green. But consider if this type of insurance becomes widespread: If federal and state governments, businesses, and homeowners realize that non-green buildings have become obsolete and insure that any rebuilding will be done green, there will be a wave of green rebuilding across the country. Instead of damaged homes being rebuilt to yesterday’s standards, they will be rebuilt to tomorrow’s.

Though Fireman’s Fund was the first to offer green insurance, other companies such as AIG/Lexington Insurance Company, Travelers, Zurich, and Chubb have jumped on board, indicating that green insurance is here to stay. As some companies offer premium discounts for current green homes and options such as upgrading LEED certification levels in the event of a loss, make sure you do your homework and choose a borker who knows the nuances of green insurance.

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